In addition to rounding up the week’s important issues in the financial markets, we’ve also added brief thoughts on what effects on wealth and investment management you should watch for, which we’ll continue to highlight each week.

Market Action:

In a generally quiet week for markets, the outlook for 2017 remained positive throughout much of the developed world. In the U.S., several stories broke about increased hiring plans (from Amazon and from Alibaba) even as inflation expectations have risen and as wages look likely to continue rising in a tightening labor market. The World Bank has even suggested that President-Elect Trump’s tax plan could be positive for global growth as it spurs U.S. activity. The uncertainty from his plans have shown up in markets though: Bank of America and JPMorgan posted solid profits on trading activity post-election, the Mexican peso hit an all-time low, and corporations are planning on offering fewer securities in the near future

Outside the U.S., the outlook for Europe continued to brighten as Chinese prospects dimmed. Germany in particular outperformed expectations with solid growth and exports. The U.K. also saw strong consumer demand, but the Brexit outlook remains unclear given the ongoing fight for access to the Continent to sell financial services, the pummeling that the pound took after comments from Prime Minister May, and the unfolding scandal about misleading positive commentary from the government about foreign investments post-Brexit. The low new-issue premium in European corporate bonds also is risking a buyer revolt.

In contrast to Europe, China looks worse off both geostrategically and economically. On the political side of things, the standoff in the South China Sea looks likely to continue intensifying, and as one of President Obama’s last acts in office, he lodged a suit at the World Trade Organization against protectionist Chinese policies in aluminum. On the economic side of things, China reported both dropping exports and rising bank lending despite fears of a credit bubble.

What to Watch:


The Polly Portfolio Team